Comms Dealer

Analysis by Philip Carse, Megabuyte.com: The usually well informed Nic Fildes at The Times this morning reports that Virgin Media is in talks to acquire Daisy, but that the negotiations have stalled over price.

Such a move would be strategically sensible for Virgin Media Business, creating a near £1bn B2B business, while Daisy's 12x EBITDA target doesn't seem too ambitious.

According to the article, informal talks between Liberty Global/Virgin Media Business (VMB) and Daisy have stalled over price, with Daisy holding out for 220p a share (versus 188p close yesterday). The article also notes that Daisy has pulled back from a bid for Phoenix, since when Phoenix has installed a new CEO and raised £8.6m.

Daisy CEO Matt Riley told us that he can't comment on press speculation.

A Virgin Media Business bid for Daisy would in many respects be unsurprising and strategically sound. While Virgin has steered clear of M&A in recent years, the arrival of Liberty Global last year will have changed the whole dynamic for the business, with Liberty Global being rather fond of M&A.

Daisy would add £350m of revenues to Virgin Media Business's £605m, taking the combined B2B group to within a whisker of £1bn and the broader Virgin business to nearly £4.5bn.

There would also be a good fit: VMB is strong in public sector, especially local authorities, and enterprise, where Daisy has growing ambitions, whilst Daisy is strong in SME, where VMB has historically been weak despite having a network passing millions of small businesses. Bringing much of Daisy's traffic on to Virgin's network would also presumably unleash significant synergies. Daisy also now has a reasonable data centre and hosting presence, where Virgin has hardly featured.

Meanwhile, a Daisy/Phoenix tie up had been rumoured for some time, which would have added significant revenues to Daisy (£230m), but a lower 50% EBITDA lift (about £30m versus Daisy's £56m).

It would however have presented Daisy with considerable integration challenges given Phoenix's well publicised problems (unclear strategy, poor business performance and accounting irregularities). One of the attractions of Phoenix to Daisy would have been its IT services business (engineers etc), but Daisy can also go for this market on its own, particularly given last October's Indecs acquisition.

A 220p price for Daisy would equate to about 12x EBITDA, which does not seem an overtly ambitious target given current Telecoms and Networks multiples of 8-12x, with Alternative Networks on 11.7x and Talk Talk on as much as 15.5x (reflecting EBITDA being depressed by investments in TV).

However, Liberty paid only 8.8x historic/7x expected EBITDA for Virgin Media just over a year ago, and is paying just 11.3x EBITDA for Dutch cable TV operator Ziggo, which comes with billions of network assets. However, Telecoms & Networks has been the best performing of the Megabuyte peer groups in share price terms over the last year, and VMB will have to stump up higher valuations anyway if it wants to buy sizeable companies.

If the two sides fail to reach agreement, Daisy still has a substantial M&A war chest, though some sizeable and obvious fits have gone elsewhere (for example InTechnology, acquired by Redcentric), while Updata may well fall into the hands of Capita.

Daisy Group has dismissed news reports on a possible £500m-plus takeover by US-based cable giant Liberty Global as no more than press speculation.

News reports suggests that talks broke down due to a disagreement over the price to be paid for Daisy.

The reported discussions about a possible acquisition come just weeks after Daisy secured a five-year agreement to provide services and engineering support to Virgin Media, which is part of Liberty Global.

In depth anlaysis by Megabuyte.com

Daisy Distribution has today dismissed rumours linking it with the acquisition of Avenir Telecom.
 
Following Jean-Daniel Beurnier's announcement earlier this week that Avenir is to exit the B2B airtime distribution market next month, Daisy Distribution had been rumoured to be in line to acquire the business.
 
However, Daisy Distribution Managing Director Dave McGinn has refuted these rumours and has confirmed that the company has no plans to acquire Avenir and is instead offering support to those partners whose futures have been placed in doubt by the news.
  
"We are sympathetic towards any partners who may feel they have been put in a precarious situation given the short timescales involved in Avenir's exit from the airtime market," said McGinn.
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"While we are definitely not looking to acquire Avenir Telecom I can confirm that airtime is a major focus for Daisy Distribution and I am willing to personally speak to anyone affected by this news."

Nearly half of IT professionals think wearable technology will outsell traditional consumer electronics products within five years, according to new research by IT job board CWJobs.co.uk.

Over two thirds (65%) of respondents also believe that the rise of wearable technology will generate new types of jobs in fields such as design and human physiology, challenging IT professionals to diversify their skill base.

Respondents expected the skills most in demand by the burgeoning industry to include security, followed by sensor technology skills.

However, only 28% felt IT professionals in the UK are equipped to take advantage of the expected explosion in opportunities.

Furthermore, 74% felt the Government is not investing enough in research and development of wearable technology, with only 3% naming Great Britain as the country leading the field, lagging far behind Japan (34%) and the US (31%).

Richard Nott, website director at CWJobs.co.uk, said: "Wearable technology was yet again the buzzword at this year's CES indicating it's more than a passing fad.

"This is an exciting field of IT, but IT professionals must be willing to skill-up in new areas to take advantage."

The majority of professionals (57%) indicated that they would be more likely to consider a job in consumer electronics because of wearable technology and over 60% felt there could be just as much opportunity for wearable technology in the enterprise market.

KCOM Group has raised more than £17,000 to help young disadvantaged people across the UK by taking part in The Prince's Trust Million Makers competition.

Million Makers is an entrepreneurial challenge in which teams from organisations across the UK compete to raise money for The Prince's Trust by creating and running an enterprising initiative for six months.

KCOM, a Prince's Trust patron since 2012, entered two teams in the challenge, with its Exeter-based Eclipse brand competing in the South West region and its Wakefield and Hull offices competing in the Yorkshire and Humber region.

Sarah Church, Million Makers manager at The Prince's Trust, said: "We're delighted that KCOM Group has been inspired to go above and beyond to raise more than £17,000 for The Prince's Trust. Not only will it help us to continue delivering programmes to support young people, by giving them the skills they need to succeed, but it will also provide one to one mentoring for young people that will boost their confidence.

"We're committed to providing young people with a second chance and a positive future, and the KCOM Group's creative and effective fundraising ideas are key to making this happen. From backing our xl clubs, which support young people struggling in school, to our Enterprise programme, which helps budding entrepreneurs into start-ups, it's businesses like this which are helping us to transform even more lives in 2014."

Managing Director at Eclipse, Clodagh Murphy, said: "Throughout the challenge, I've been blown away by the dedication of the team and it's been a real pleasure to see them grow in confidence and develop their skills.

"The entrepreneurial flair from the team was evident - as well as developing an app for Eclipse customers, they carried out fundraising activities including car boots and a hugely successful Halloween Gala. This challenge has been rewarding for the whole team and I am excited to see what the next Eclipse team taking part will accomplish."

Chief Financial Officer at KCOM Group, Paul Simpson, said: "The Yorkshire and Humber team came up with some great ideas to raise money, including a silent auction and a Christmas party for employees, friends and business contacts. Million Makers is a fantastic initiative for us to be involved with and fits in with our business focus on innovation and creative thinking."

The KCOM Group has pledged £100,000 of financial support to The Prince's Trust over four years.

Azzurri Communications has lifted the curtain on ICON Communicate, the first in a series of ICON Cloud and Managed Services products launching throughout 2014.

ICON Communicate is a fully managed suite of communications services incorporating IP telephony, unified communications and contact centre offerings delivered from the cloud.

The City & Guilds Group, a global leader in skills development, has already signed up as a key part of its strategy.

Azzurri's ICON Communicate scales for organisations with 250-5,000 users and builds on a significant investment in its cloud infrastructure.

Rufus Grig, CTO, Azzurri Communications, said: "Organisations are increasingly focused on the task of better aligning IT services to business function. But this is leaving CIOs battling to shift their already stretched resources away from 'keeping the lights on' towards more innovative projects which drive growth and competitive advantage.

"ICON Communicate provides a flexible, managed service which allows them to focus their energy and budget into delivering differentiation."

Nimans has bagged the Outstanding Distributor Award 2013 from long-range wireless technology company Engenius.

Nimans is the exclusive distribution partner of various products including the Extreme cordless telephone that offers more coverage than any other consumer rated cordless device in Europe - up to 2km. Superior multi floor coverage can even penetrate concrete.

The accolade, for excellent performance and sales contribution, comes on the eve of the launch of a new wireless networking portfolio such as indoor and outdoor long range Wi-Fi access points.

"It's been another year of great collaboration between Nimans and EnGenius Europe," said Andy Winfield, Purchasing Director at Nimans. "Engenius products continue to grow in popularity. The latest network devices represent an exciting new chapter in our ever-closer partnership."

Malcolm Chng, Business Development Director at Engenius Europe, added: "With Nimans' ongoing commitment we strongly believe this success will continue throughout 2014."

Pictured: Malcolm Chng, Business Development Director at Engenius Europe, with Andy Winfield, Purchasing Director at Nimans.

Phoenix IT Group has named Stephen Vaughan as the Group's Chief Executive Officer with immediate effect.

Peter Bertram, Executive Chairman, will resume his previous role of Non-Executive Chairman from 1 April 2014.

Vaughan, aged 53, has over 30 years of experience in the technology sector. During a 14 year career with EDS (UK) Ltd, he held a number of senior executive roles.

He was subsequently CEO of Synstar plc from 2001 to 2005, where he implemented a major change programme culminating in the acquisition of the business by Hewlett Packard.

In his position as CEO of Communisis plc from 2006 until 2010, Steve successfully launched a new strategy which gave rise to a significant turnaround in the company's performance. From July 2013 to February 2014, Steve was Chairman of Charteris plc and led its successful sale to French group Sword through an agreed cash offer.

The Group also announces today its intention to place 7,547,934 new ordinary shares of 1p each in the capital of the Company at a price of 114 pence per Placing Share representing approximately 9.99 per cent of the Company's existing issued share capital.

The Placing will raise approximately £8.6 million and will be used to accelerate debt reduction and to maintain balance sheet strength and flexibility.

Peter Bertram, Executive Chairman of Phoenix IT Group, said: "Steve has a great deal of experience in the technology sector. His strong track record and industry knowledge will be of great value to the Group."

Vaughan added: "Phoenix has a strong portfolio of service offerings, great staff and an excellent client base. I am looking forward to taking the ompany into its next stage of development."

Brocade has named Christine Heckart as its new Chief Marketing Officer (CMO), responsible for the strategic direction of Brocade's global marketing organisation. She will report directly to Brocade's Chief Executive Officer Lloyd Carney.

"The data centre must transform to meet the IT demands of the modern era that are driven by cloud, virtualisation and mobility," said Carney. "Christine's marketing experience and expertise are well suited to help propel Brocade forward in the global marketplace to drive demand for our next-generation solutions."

With more than 25 years of experience in the high-tech industry, Heckart has held a number of senior marketing leadership positions at networking and other high tech companies.

Most recently at ServiceSource, a SaaS provider that helps drive recurring revenue she served as EVP Strategy, Marketing, People and Systems where she was responsible for establishing a new market around recurring revenue management.

Prior to that Heckart held CMO roles at NetApp and Juniper Networks, as well as being General Manager, TV, Video and Music Business at Microsoft.

Heckart serves on the Board of Directors at Lam Research, a leading provider of wafer fabrication equipment to the semiconductor industry.

"With the adoption of fabric-based networking, NFV, SDN, and cloud-based computing, end users are actively seeking technology partners that can help them drive business transformation," said Heckart.

IBM's CEO Ginni Rometty has stated in a letter to investors that the company did not meet its expectations in 2013.

IBM will continue to alter its focus to cloud services and data analytics while modifying its hardware products.

"While we continue to remix to higher value, we must also address those parts of the business that are holding us back," she says.

IBM's 2013 operating pre-tax income was down 8%. "We have two specific challenges, and we are taking steps to address both," added Rometty.

"The first involves shifting the IBM hardware business for new realities and opportunities. We are accelerating the move of our Systems product portfolio-in particular, Power and storage-to growth opportunities and to Linux, following the lead of our successful mainframe business."

IBM has agreed to sell much of the Intel-based x86 server business to Lenovo. Rometty added: "This divestiture is consistent with our continuing strategy of exiting lower-margin businesses, such as PCs, hard-disk drives and retail store solutions. But let me be clear, we are not exiting hardware."

The second challenge involves the world's growth markets. "While IBM's growth in Latin America and Middle East and Africa was strong, enterprise spending slowed in other key growth markets. We are intensifying focus on new growth opportunities," Rometty said.

To meet growing demand for greater speed, and legal requirements for compliance and data residency, IBM is expanding its global cloud footprint.

It currently has 25 data centres globally, and the new $1.2 billion investment announced in January will see the opening of 15 more, in the US, UK, Australia, Brazil, Canada, China, France, Germany, India, Japan and Mexico.